What does a bond cover?

A bond is an obligation of the surety company (the company issuing the bond) to protect one person (a.k.a. Obligee) against financial loss caused by the acts of another (a.k.a. Principal). Some common bonds are Performance Bonds, Notary Bonds, and Dishonesty Bonds:

Performance Bonds are to insure that the contractor performs the work they are contracted to perform.

Notary Bonds allow a person to notarize documents.

Dishonesty Bonds protect a housekeeper, maid, or janitor against claims that the housekeeper stole or broke a client’s property.